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Unformatted text preview: Motivation Probability and Statistics Readings and Homework Quantitative Economics and Econometrics Sorawoot Srisuma Lecture 1 Motivation Probability and Statistics Readings and Homework Goal of the Revision 1. Intro to econometrics 2. Why we need statistical methods 3. Basic concepts in statistics in a simple setting Motivation Probability and Statistics Readings and Homework Introduction What is econometrics and why is it important? Motivation Probability and Statistics Readings and Homework Introduction What is econometrics and why is it important? Some questions: & Does reducing class size improve elementary school education & Is there racial discrimination in the market for home loans & How much do cigarette taxes reduce smoking & What will the rate of in&ation be next year Motivation Probability and Statistics Readings and Homework Introduction What are we interested in? & Causal e/ects & Forecasting How do we go about answering these questions? Motivation Probability and Statistics Readings and Homework Introduction Di/erent types of data requires di/erent types of analysis & Experimental and observational data & Crosssectional data & Time series data & Panel data Motivation Probability and Statistics Readings and Homework Random Variables We need to revise statistical concepts since economic data are modelled as outcome of some data generating process What is a random varialble? & Formally a RV is a map X : Ω ! R & X can take continuous values, e.g. time it takes for you to get to school, price of a bond, in&ation level & X can take discrete values, e.g. decisions whether which smart phone you buy, a number of machines a ¡rm decides to purchase & X can even be mixed discretecontinuous (we don¢t worry so much about this case, perhaps until next term), e.g. wages, number of hours you choose to work Motivation Probability and Statistics Readings and Homework Random Variables Let&s be speci¡c, let X takes values 1 or 2 . Popular features of the RV are those related to expectations & Expectation: E ( X ) = μ X = 1 ¡ Pr ( X = 1 ) + 2 ¡ Pr ( X = 2 ) Motivation Probability and Statistics Readings and Homework Random Variables Let&s be speci¡c, let X takes values 1 or 2 . Popular features of the RV are those related to expectations & Expectation: E ( X ) = μ X = 1 ¡ Pr ( X = 1 ) + 2 ¡ Pr ( X = 2 ) & Variance: Var ( X ) = E & ( X ¢ μ X ) 2 ¡ = ( 1 ¢ μ X ) 2 ¡ Pr ( X = 1 ) + ( 2 ¢ μ X ) 2 ¡ Pr ( X = 2 ) Motivation Probability and Statistics Readings and Homework Random Variables Let&s be speci¡c, let X takes values 1 or 2 . Popular features of the RV are those related to expectations & Expectation: E ( X ) = μ X =...
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 Spring '10
 Srisuma
 Economics, Econometrics, Standard Deviation, Variance, Probability theory, µx, RV X

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